Does s. 247 apply in computing a foreign affiliate’s foreign accrual property income in the context of a transaction between it and another nonresident person?
CRA indicated generally “yes,” but that, in a transaction between a foreign affiliate and another non-resident impacting the foreign affiliate’s FAPI, CRA would generally not challenge the pricing of that transaction if:
- the pricing is reviewed by the tax authority of the country in which the foreign affiliate is resident;
- the pricing is determined to be in accordance with the transfer pricing legislation or guidelines of that country; and
- that legislation (and guidelines) adopt the arm’s-length principle.